Spot silver surged more than 5% to just above $49 an ounce on Monday, buoyed by a weak dollar and strong physical demand in Asia that also propelled gold to a record high for a seventh consecutive session.
US silver futures jumped 8,2% to $49,82 an ounce in unusually large trading volume, just about 50c off its all-time peak of $50,35 hit on January 18 1980.
“Everyone is buying,” said a Hong Kong-based dealer. “There is stop-loss buying, as well as a good buying interest from China.”
Spot silver hit a 31-year high of $49,25 an ounce, and was trading at $48,82 by 0643GMT. It was heading for its biggest daily gain in five months.
Silver prices have climbed nearly 60% so far this year, after jumping more than 80% in 2010, outpacing gold’s 7% rise and the 10% gain in the 19-commodity Reuters-Jefferies CRB index.
Silver’s astounding run has attracted big and small investors.
Holdings in the world’s largest silver-backed exchange-traded fund, iShares Silver Trust, have risen by 2,4% so far this year, compared to a 4% decline in the holdings of SPDR Gold Trust, the world’s top gold ETF.
Buying interest in physical silver has also jumped in India, where gold is traditionally favoured as a storage of wealth.
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“The rally has been great as traders are buying silver like mad,” said an official at a private bank in India.
“We normally don’t import silver on a regular basis, but we imported about 10 tonnes from last month. Investors are joining in the rally in India to catch on the price appreciation.”
Spot gold hit a record high of $1 517,71 an ounce, before easing to $1 515,65, up 0,8%.
US gold futures also rose to an all-time high, at $1 518,6.
“It’s the dollar play,” said a dealer based in Singapore.
The dollar index languished around its three-year low yesterday, with investors expecting further weakness as the upcoming Federal Reserves’ policy-setting meeting is likely to announce the continuation of low interest rates.
